Tuesday, September 28, 2010

Buy SPY and GLD (sell puts)

Buy SPY via selling Nov 91 puts, SPY@114.4. I add to my long SPY position. Despite the market rally there is still quite a bit of skittishness in the option premiums.

Buy GLD via selling Nov 113 puts, GLD@127.7. Gold futures fighting through the $1300 round number level. Yes, it is extended. My Oct position is approaching delta zero, so opening a Nov position continues to give me a small exposure.


Friday, September 24, 2010

Buy SPY and TLT (sell puts)

Buy SPY via selling Oct 104 puts, SPY @114.2. I am already short SPY Oct 97 puts. There was an article on Barrons online suggesting the purchase of October SPY puts as portfolio protection. Buying short term puts is an expensive form of insurance, and when pundits make public suggestions to do so it is a sign of nervousness.

I also buy TLT via selling Nov 94 puts TLT@103.6.


Thursday, September 23, 2010

Buy BRKB (sell puts)

Buy BRKB via selling Nov 70 puts, BRKB @82.2. Chart support at 76 and then 70. I have an urge to open Nov positions on GLD, SPY, TLT, but think there will be a better time to sell options in a day or a few days.


Wednesday, September 22, 2010

Luby: Education of a Trader

Bill Luby at Vix and More (link) has an interesting entry about the education of traders, and his own journey.

As I see it, all traders are ultimately self-taught. There are no required classes, readings, homework assignments or even a syllabus with recommendations. Tests are administered on a daily basis, frequently with multiple tests on the same day. Worst of all, everyone is graded on an unfavorable curve in which there are more Fs than As.

Against this backdrop, education counts, but skill and experience count even more. An insatiable curiosity helps, as does a willingness to explore unfamiliar territory. Great trades, insights and strategies present themselves in somewhat random fashion and, as Louis Pasteur observed, “Chance favors the prepared mind.” ...

Readers of my blog that have been with me from the beginning (over three years ago) can see an evolution in the types of trades that I take on. Keeping some kind of trading journal can be instructive for review. It helps a person learn from the past. Often times I find it is the emotional state to be a key indication of a winning or losing trade.

As I've written a few times, there are a lot of ways to skin a cat, a thousand ways to make money in the markets. Finding a style that suits a person's personality is a key. Try to copy someone else, or fit into a style that isn't the real you, and it will twice as hard.

Friday, September 17, 2010

6-1 for September

Six winners, one loser for the September option cycle, for a small profit. BRKB, GLD, TLT, SPY all came in on the positive side, with multiple trades on TLT. The loser, short TBT puts, was relatively big and ate up all the profits from the offsetting TLT trades.

The glass half full view is that opinion wise, I was wrong on all three markets (bonds, gold, stocks), and still eeked out a positive month by sitting out most of the action.

I have three small positions going forward to October, short puts on GLD, SPY, TLT.


Thursday, September 16, 2010

Buy GLD, SPY, TLT (sell puts)

Buy GLD via selling Oct 115 puts, GLD @124.7. Buy TLT via selling Oct 95 puts, TLT @101.4

I get off the sidelines and open some small October positions. I may add SPY in a bit.

/edit to add: I went ahead on SPY selling SPY Oct 97 puts with SPY@112.6. Again, these are small positions just to keep some skin in the game for October.


Friday, September 10, 2010

A theory as to why bonds are down

I have a theory as to why the bond market is down so much this month. Historical seasonality tends to favor weaker stocks, stronger bonds. Tuition bills are one reason that so much liquidation goes on this time of year. Many small investors save to pay those college bills.

The theory is that now that small timers have piled so much money into bonds, and bond funds, the outflows are coming from there.

Wednesday, September 08, 2010

Still here

I'm still here, still watching, and for the most part, I'm still sitting this one out. A bit of good news is that ThinkorSwim has straightened out their software problems.

I mentioned my biases a few posts back, and for the most part they have been wrong. Stocks and gold have moved up, bonds have moved down. My exposure is minimal. I don't have any open October positions.

Wednesday, September 01, 2010

Missing the boat

The stock market is in full rally mode today, with the Dow up over 200 points. For the most part, I missed the boat. In theory, a trader could have been short, long, short, long and made a bundle during the past few week or so. Nimble is not a word I use to describe my trading style. Problems related to the ThinkorSwim software platform add to my cautiousness. For now, I am sticking to the TOS website, which is slow but it is at least working.

There are worse things than missing the boat. A trader might be on the wrong side of the market. A trader can compound missed opportunities with high risk trades after the low risk entry point has passed. In hindsight, it is easy enough to see all the press about September being the historically worst month for stocks, to conclude that the decline into the end of August would be a good time to buy. Trading is easy in hindsight.